Recent headlines about major brands entering administration may give the impression that all is doom and gloom in retail, but this is far from the case according to new research from Deloitte.
The survey compiles responses from more than 500 retail, pure play, consumer goods and branded manufacturing leaders from across the world. The results showed that while some traditional brands are struggling to adapt, brand leaders are using new technology such as AI, engagement platforms and mixed reality AR/VR to produce growth.
The facts on growth
Despite the problems of some high street brands, retail spend has outperformed GDP and risen every year since 2009. In 2016, 44% of consumers said they spent more on retail than they had the previous year; only 14% reported spending less.
Although ecommerce growth is set to outstrip bricks-and-mortar retail (ecommerce is predicted to grow $50bn by 2022), physical stores are still set to grow by $36bn in that time. So there is plenty of opportunity out there for brands prepared to seek it.
Four disruptive factors
The report identifies four disruptive forces which are shaking up retail:
1. Consumer disruption
Today’s shoppers live in a world of smartphones and connectivity; they expect speedy transactions and total convenience. For consumers used to one-click ordering, spending ten minutes waiting in a checkout queue is increasingly less acceptable.
2. Technological Disruption
Technology is changing every aspect of the consumer experience, from awareness to purchase, online and in bricks-and-mortar stores. More than a third (34%) of shoppers have researched a product online using a mobile device while in a physical store. Innovations including AI allow brands to develop highly personalised offerings to customers.
3. Competitive Disruption
Competition is no longer about other stores in a two-mile radius. Nowadays, brands are subject to a huge volume of competitors including innovative newcomers such as pure plays, subscription services and the likes of Amazon with almost unlimited resources to target consumers.
4. Economic Disruption
Today’s distribution of income and expenditure means low-cost and premier brands are seeing growth, while the centre ground struggles. This retail bifurcation means brands either need to achieve one of three things: lowest possible prices, the best possible product and experience or the best possible combination of price and branded products and experiences.
Engagement and discovery the greatest challenge
The top of the funnel was the most problematic area for brands; 32% reported that more improvement was needed in this area. Just under a quarter (24%) said awareness and acquisition were top areas of concern, followed by 14% focusing on browse and shop.
One of the key reasons why engagement and discovery and awareness and acquisition are challenging to improve is that they require smart use of data. Many brands have data scattered through the business, making it hard to analyse.
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